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Our perception of time says everything about how we handle our finances

If you want to get better at managing your finances, stop fussing over dollars and cents — instead, take a good hard look at how you perceive time.

Philip Zimbardo, psychology professor at Stanford University, has long studied the link between how we perceive time and the choices we make in our daily lives. He literally wrote the book on it — called “The Time Paradox” — in which he debuted his “Zimbardo Time Perspective Inventory,” a 61-question quiz that measures the way in which people think about time differently.

In a new study done in partnership with MagnifyMoney.com, a website that educates consumers about financial products, Zimbardo used his index to explore the link between our perception of time and its impact on how we manage our finances. He and MagnifyMoney.com co-founder Nick Clements asked more than 3,000 people in six different countries to take the quiz. Before doing so, each participant had to answer questions about their overall financial health (level of debt, bankruptcy history, etc.) and rate their financial knowledge on a scale of 1-7.

Immediately, some trends began to emerge. People who based their decisions on the past tended to be more cautious with their spending and more financially healthy. Those who focused mostly on their present situation were more likely to make the sort of impulsive decisions that could lead to more debt and living beyond their means.

“Whether you can do math or have a high degree of financial literacy does not mean we can predict if you’ll be financially sick or financially healthy,” Clements says. “But we can tell whether you’ll be financially healthy or sick based on your time perception.”

To see how your time perception might be influencing your money decisions, take Zimbardo’s quiz here. Don’t worry about being tested on your financial know-how — the quiz is designed to assess your perception of time by asking you to decide whether certain statements are true or untrue about your life.

For example, if you agree with a statement like “If I don’t get things done on time, I worry about it,” you’re probably more of a future-thinker. A “past-positive” person might agree with a statement like “Familiar childhood sights, sounds, smells often bring back a flood of wonderful memories.” They would make financial choices based on what has felt good and comfortable to them in the past. In contrast, a “past-negative” person might agree with “I’ve made mistakes in the past that I wish I could undo.” They would make decisions based on what didn’t work out so well for them in the past.

Likewise, a “present thinker” would probably agree with this statement: “Taking risks keeps my life from becoming boring.” That’s the type of risky behavior that can lead to impulsive money habits.

When you finish the quiz, you'll get a list of tips on how to use your time perception to your best financial advantage — and learn how it might be working against you.

If you let the past dictate your decisions: There are pros and cons to living in the past. Past-oriented thinkers take positive and negative experiences and consider them carefully in future decision-making. A past-positive thinker may sign up for a new bank account, have a great experience, and stick with them for many years out of loyalty. A “past-negative thinker” may throw money into the stock market, lose a bundle and swear off investing ever again (not surprisingly, Millennials were much more likely to skew past-negative than baby boomers in the study).

The key is finding a balance between past-positive and past-negative thoughts. You might stick with a bank out of loyalty and miss out on potential rewards of switching, like sign-up bonuses and lower fees. Likewise, you might ditch the stock market and miss out on years of positive returns.

If you focus on the present: Clements, a former credit card company executive, says his marketing team used to have a special name for consumers who lived for the present — impulsive indulgers. “These are the people who grab candy at the checkout counter and buy their friends a round of drinks to keep a party going,” he says. They make excellent credit customers — the kind of people who rack up their charge card without thinking about the future and wind up paying more in interest and fees.

If you tend to be more impulsive, “a ban on credit cards may be a good place to start,” Clements says. You might also benefit by having a slice of your paycheck automatically deposited into a savings account each month, which can reduce the chance that you’ll spend it all in one outing

Another downside to living for the here and now is that it can result in a feeling of powerlessness in the face of money troubles. Without the ability to look forward for a solution, present-minded individuals tend to get stuck where they are.

If you’re a futurist: Don’t get too ahead of yourself, Clements warns. Future-thinkers do tend to be better with their finances, but they can go overboard when it comes to things like purchasing insurance and over-saving. They’ve read all the personal finance books, they know all the risks of poor planning and they are willing to do whatever it takes to protect themselves. “It’s really easy to oversell insurance to people with future orientation,” Clements says. “They’re constantly worrying about tomorrow.”

Like past-oriented consumers, who obsess over what happened before, futurists run the risk of letting their fear of what could happen in the future rule their decisions.

“They want to be successful, and that can lead to suboptimal decisions,” the report says. “Financial literacy is important for this group, because they are going to take action. People with this profile need to beware expensive insurance, investments that are too good to be true and following the crowd.”

The bottom line: If you realize you’re leaning heavily in one of these directions, the best way to improve is to try to strike a balance between all three. Don’t obsess over “what if?” so much that you can’t enjoy the fruits of your labor today. Don’t let bad experiences in the past completely dictate your current decisions. Seek objective advice from a financial planner to handle decisions you may be overly emotional about.

“Everyone should have some good memories of the past, know how to control themselves in the present and have some idea of their future,” Clements says. “But too much of any one of those things is when things get out of whack.”